TUPE: post-transfer removal of a travel allowance was not void

The EAT has held that the withdrawal of a contractual travel allowance following a TUPE transfer was not void under regulation 4(4) of TUPE. The variation of the terms of employment was due to the Respondent's conclusion that the allowance was outdated and unjustified. Therefore, the Employment Tribunal had been entitled to conclude that this was a reason unrelated to the transfer (Tabberer v Mears Ltd).

Background law

This case concerned the pre-2014 version of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE), which provided that changes to employees' terms and conditions of employment were void if the sole or principal reason for the change was either:

the transfer itself; or

a reason connected with the transfer that is not an economic, technical or organisational reason entailing changes in the workforce.

It is likely that the outcome would have been the same under the current iteration of TUPE which provides that changes to terms and conditions are only void if the sole or principal reason for the change is the transfer.

Facts

The Claimants were electricians who had originally been employed by Birmingham City Council. Whilst working for the Council, the Claimants had been entitled to an Electricians Travel Time Allowance (ETTA). The ETTA had been in existence since 1958, before any of the Claimants commenced employment and was originally intended to compensate electricians for the loss of a productivity bonus caused by the need to travel to different depots. At that time, the Council had 30 to 40 depots across Birmingham but, at the time of the claim, only one remained. Productivity bonuses had also been phased out.

Over the years, the electricians' employment had transferred a number of times under TUPE and, although the changes to their working practices meant that there was no longer a need for the ETTA, they had continued to receive it. In 2006, managers questioned the continued payment of ETTA but were advised that there was a legal requirement to pay it. When the Claimants transferred to the Respondent in 2008, the Respondent decided to stop paying the ETTA.

Ten electricians brought claims for unlawful deductions of wages. The EAT found in the electricians' favour and determined that there was a contractual entitlement to the payments (Mears Ltd v Salt and others UKEAT/0552/11). Thereafter, the Respondent subsequently wrote to the electricians giving notice of the removal of the ETTA from their terms and conditions of employment.

The electricians brought claims, arguing that the variation of their terms was void under regulation 4(4) TUPE.

Employment Tribunal decision

The Tribunal rejected the claims. It found that the Respondent had decided to stop making the ETTA payments because they were outdated. Therefore, the reason for the variation was not the transfer itself or a reason connected with the transfer.

EAT decision

The Claimants appealed to the EAT, arguing that Tribunal's decision ignored the fact that the subject matter of the Salt litigation was the TUPE transfer and there was a clear and continuing link to the transfer. Also, the Claimants argued that the Tribunal's interpretation rendered regulation 4(4) wholly ineffective and open to easy avoidance.

The EAT dismissed the appeal. The Tribunal's finding was that the Salt litigation had been the context for the Respondent's decision, not the reason for it. To the extent that the Salt litigation was relevant, it was because it set the context or forced the issue. It did not create a connection to the transfer. It had been open to the Tribunal to find that the Respondent's decision to remove the ETTA was because it believed the entitlement was outdated. Given that managers had previously challenged the ETTA, the belief that it was outdated did not arise because of the transfer; it was a pre-existing belief. In the circumstances, the Tribunal had been entitled to conclude that the variation was not for a reason connected with the transfer.

Comment

This case is a useful example of a permitted change to terms and conditions following a TUPE transfer. The EAT restated that regulation 4(4) does not involve a "but for" test. Rather, the question to be asked is what caused the employer to do what it did? In this case, it was clear that the reason for the change was one which would have applied regardless of the transfer.